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Other cases have developed a framework for determining
whether sales of land are considered sales of a capital asset or
sales of property held primarily for sale to customers in the
ordinary course of a taxpayer’s trade or business. See Major
Realty Corp. & Subs. v. Commissioner, 749 F.2d 1483 (11th Cir.
1985), affg. in part and revg. in part T.C. Memo. 1981-361; Byram
v. United States, 705 F.2d 1418 (5th Cir. 1983); Suburban Realty
Co. v. United States, 615 F.2d 171 (5th Cir. 1980); Parkside,
Inc. v. Commissioner, 571 F.2d 1092, 1096 (9th Cir. 1977), revg.
T.C. Memo. 1975-14; Biedenharn Realty Co. v. United States, 526
F.2d 409 (5th Cir. 1976); United States v. Winthrop, 417 F.2d 905
(5th Cir. 1969); Estate of Freeland v. Commissioner, 393 F.2d
573 (9th Cir. 1968), affg. T.C. Memo. 1966-283; Los Angeles
Extension Co. v. United States, 315 F.2d 1 (9th Cir. 1963).
In Suburban Realty Co. v. United States, supra at 178, the
Court of Appeals stated that the definition of “capital asset”
gave rise to three questions:
1) was taxpayer engaged in a trade or business, and,
if so, what business?
2) was taxpayer holding the property primarily for
sale in that business?
3) were the sales contemplated by taxpayer “ordinary”
in the course of that business?
In United States v. Winthrop, supra, and Biedenharn Realty
Co. v. United States, supra, various factors were considered in
answering the three questions:
(1) the nature and purpose of the acquisition of the
property and the duration of the ownership; (2) the
extent and nature of the taxpayer’s efforts to sell the
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